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In the 1890s, in New York City, Matthew Burke, part-owner of a wax museum, needs money and is impatient over his partner's, the refined and eccentric wax sculptor, Prof. Henry Jarrod's, insistence that the museum avoid lucrative sensationalism. For the insurance money, Burke sets fire to the museum. Jarrod, horrified to see his exquisite wax figures of famous historical people, which he considers "friends," melt away, fights Burke and tries to put out the flames, until gas fumes unite with the fire and the building explodes. Later, Burke receives all of the insurance money, as Jarrod is believed to be dead, but Burke is then killed and left dangling in an elevator shaft. At a boardinghouse, a giddy, promiscuous blonde, Cathy Gray, who was dating Burke, is found dead in her room by her friend and fellow boarder, Sue Allen. Sue is chased out the window and through the streets by a man in black, until she takes refuge with friends of her family, Mrs. Andrews and her son Scott. The next day, when the Andrewses and Sue visit the police, Lt. Tom Brennan mentions that Cathy's body, as well as several others, have disappeared from the morgue. Meanwhile, Sidney Wallace, a wealthy financier, is contacted by a wheelchair bound Jarrod, who has survived the fire, but claims that he suffered permanent loss of his hands and legs. As he can no longer sculpt, Jarrod has hired assistants, the deaf-mute Igor and talented sculptor Leon Averill, to help him recreate his wax figures, and using a new procedure he has devised, build another museum. Jarrod says that, as he can no longer create beauty, he plans to make a horror museum and expects that the museum will be profitable. After being shown Jarrod's basement laboratory, where plaster-of-paris figures are dipped in a vat of boiling wax, Wallace agrees to finance the museum. Scott, who has grown fond of Sue, takes her on opening day to the Grand Wax Museum and Chamber of Horrors, where they wander through recreations of executions by electrocution, torture and guillotine, as well as recent events, such as the mysterious hanging of Burke. When Sue sees the figure of Joan of Arc, she is shocked by its likeness to Cathy, which, except for its dark hair, is exact, even to its pierced ears. After Wallace introduces Scott and Sue to Jarrod, the sculptor remarks that Sue resembles his favorite creation, Marie Antoinette, who was destroyed in the fire, and offers Scott, who is also a sculptor, work in the museum. Sue's concern about the wax Joan of Arc's likeness to Cathy prompts Scott to take her to visit Brennan, who promises to investigate further. Brennan and his men check out the museum and find that the wax figure of John Wilkes Booth bears striking resemblance to a murdered city official, whose body recently disappeared. Brennan and Sgt. Jim Shane interview Wallace about Jarrod and his assistants, and later Shane remembers that an alcoholic prisoner in Sing Sing, who painted a recreation of "The Last Supper" in his cell, was recently paroled. They pick up Leon for questioning and after finding on him an inscribed watch belonging to the missing man, continue the interrogation. At dusk, Sue goes to the museum to meet Scott for a date and enters the darkened establishment. She again approaches the figure of Joan of Arc and still troubled by it, climbs up for a closer look. When she inadvertently knocks off the brown wig, she finds blonde hair underneath and exclaims to herself that it is Cathy's body. Jarrod, whose dependence on a wheelchair was feigned, sneaks up behind her and, after confirming her suspicion, chases her around the museum. When her struggling causes a plaster mask to break off from his disfigured face, she faints. Meanwhile, at the police station, after being plied with drinks, Leon confesses that Jarrod uses real corpses dipped in wax for his exhibits and that the body of the missing city official is on exhibit as Booth. Leon goes on to confess that Cathy was killed for her resemblance to Jarrod's vision of Joan of Arc and that Burke was killed in revenge for setting fire to the original wax museum. When Leon informs them that Jarrod wants Sue as his Marie Antoinette, the police race to the museum. Scott, who is waiting outside the museum for Sue, goes in and is confronted by Igor, who wants to behead him with the guillotine. The police arrive in time to save Scott, then break down the laboratory door. Inside they find that Jarrod is preparing to dip the drugged and naked Sue into a vat of wax. Just before her body is lowered into the cauldron, Brennan turns off the control switch and covers Sue with his jacket. While trying to escape the police, Jarrod falls into the vat and dies. Later, at the station, Scott and Sue thank Brennan for his help and Sue expresses an additional thanks for the use of his coat.